Ecuador's President Rafael Correa paid for a US PR campaign against Chevron that may have violated US laws. (Photo: Ecuador Presidency)

Wednesday, August 6, 2014

Perspectives

Ecuador’s Costly PR Campaign

Ecuador’s $6.4
million PR campaign against Chevron could violate US laws.

LATINVEX
SPECIAL Analytica

A miniscule protest in faraway Midland, Texas, has turned
into a public relations problem for the administration of President Rafael Correa that, beyond the
initial gaffe, has the potential to turn into a legal issue. US reporters
followed up on a local television report that said that the protestors
picketing Chevron's annual shareholders' meeting in the Texan city had been, in
their overwhelming majority, local stand-ins paid $85 each, instead of some of
the tens of thousands of Amazon-area victims of oil pollution the US and
Ecuadorean lawyers suing the oil company for pollution say they represent (In a
20-year old legal dispute, Chevron is being sued for oil pollution in Ecuador's
Amazon territory blamed on Texaco, which it bought in 2000; it has
countersued). What really happened remains subject to debate, but it opened the
door for potential trouble with the US Department of Justice (DOJ), as well as
for questions at home.

A Californian television production company, DFLA Films,
acknowledged that it had paid the stand-ins, and "helped" in
organizing the protest. Karen Hinton,
a spokeswoman for the plaintiffs' lawyers, said it had been organized by
MCSquared, a public relations firm; "we were not involved at all." In
contrast, MCSquared's Jean Paul Borja
denied that it had paid anyone. "We didn’t hire paid actors; we went to
the site with indigenous people to get word out," Borja told PRWeek, a trade magazine. Given what has
so far emerged and the non-existent reputation of MCSquared, his reliability
should be questioned. Hinton had told Businessweek
that MCSquared, an outfit with offices in Brooklyn, New York, and Quito,
worked for the government of Ecuador. The
Washington Free Beacon then discovered that the firm hadn't registered this
activity with the DOJ, as it was legally obliged to do as an agent of a foreign
government.

As a result, MCSquared sort of came clean three weeks
later, registering and revealing that the Correa administration had paid it
$6.4 million between May 2013 and April 2014. Even for expensive lobbying firms
in Washington, this is an eye-watering amount. For this, Ecuador received
rather modest services. The documents filed show that, at the behest of chief
spokesman Fernando Alvarado, of the
$534,000 a month of taxpayers' money, $150,000 went to studies and technical
reports on reputation tactics, $100,000 on development of a Web site, and
another $100,000 on video and multimedia content production for placement on
Web portals. There is no evidence of any of this. Instead, MCSquared's sole
content production appears to have been a series of anti-Chevron press
releases, and it has charged the government for organizing tours of celebrities
to a messy old oil pit in the Amazon, Aguarico-4, despite strong evidence that
it has been run by state-owned Petroecuador for around 20 years. According to
Spanish newspaper El País, MCSquared
also hired Fitzgibbon Media for $60,000 to spend more than $200,000 to buy
advertising space in media including The Washington
Post. Fitzgibbon, meanwhile, also represents Australian hacker Julian
Assange, who is holed up in Ecuador's embassy in London. Money also went to
secure space for op-eds and interviews, which may explain the presidential
goodwill tour to East Coast universities including Harvard and Yale and an
opinion piece by Correa in the Boston
Globe earlier this year. It also appears to have been tasked with
monitoring the activities of Ecuadorian and international NGOs, particularly
those involved with the protection of human rights and the environment.

While MCSquared received the lion's share of contracts, El País also reviewed additional Justice
Department filings, finding that Ecuador from early 2009 onwards spent about
$11 million on Washington lobbying, including $400,000 in expenses and
representation, through 10 firms including Brown Lloyd James, DTB, Fenton,
Foley Hoag, Humanitas Global Development, Patton Boggs, Van Scoyoc, Ketchum,
and Delahunt. This makes Ecuador Latin America's second biggest spender on
lobbying, behind Mexico, hence even above the likes of Brazil or Colombia.
Outside of a minor claque with very reduced prestige, this activity can hardly
be considered to have paid off. It has failed to convince US media, NGOs,
legislators, or diplomats of the merits of Correa's "revolution,"
while the government's actions have tended to reinforce its image as that of a
regime bent on repressing any form of dissent. MCSquared's failure to register
with the DOJ in a timely fashion may yet force additional scrutiny,
particularly given the company's office address in Quito, which is none other
than that of the administration's "communications secretariat." El Universo reported that MCSquared had
a separate local address from the government building.

In Ecuador, this will lead to questions about who the
true recipients of all that money have been, which, according to Nathalie Cely, Ecuador's ambassador to
the US, has been controlled by Alvarado. The company has only three known
employees, including María Garay,
identified as its owner, Borja, also a correspondent for government mouthpiece El Ciudadano, and Cynthia Zapata, a former government spokeswoman who is listed as
MCSquared's contact in Quito. Whether the questions will be answered is another
matter. Alvarado already refused to reply to written questions from El Universo, saying that "I don't
respond to corrupt reporters.”

This
commentary originally appeared in Ecuador
Weekly Report published by Analytica. Republished with
permission.